Stock Market -- Weekly

Fundamentals
1. The market normally responds very positively to quantitative easing by the Fed. There
is a powerful QE program underway which has been the primary source for the powerful
market rally underway since late 2012. The surge of monetary liquidity into the financial
system has been strong enough to encourage determined push-back from the conservative
members of Fed's board, but, since the economy has so far responded only anemically
to the program, the Fed's "hawks" have been held in abeyance.

2. QE faces important economic headwinds now including much sharper fiscal drag, a
still strongly conservative banking system and a business sector which has remained slow
to hire and even slower to reward labor productivity. There appears to be a growing number
of stock market bulls who are happy to tolerate very sluggish business sales and earnings
growth on the premise that a continuing meek economic expansion will keep large scale
QE in place and allow excess liquidity to flow into equities and some other assets, such
as housing prices. Players have been using this rationale to chase stocks higher, figuring
the continuation of QE will provide a large stream of liquidity to support the inflation of
the market. Good luck with that. Meanwhile, since a meaningful re-acceleration of real
economic growth is not yet suggested by my favorite leading indicators, I am reduced
to hoping such will show up soon.

Technical
The weekly chart shows the SPX in a powerful uptrend since the latter part of 2011. The
strong market is both heavily overbought and extended, but the indicators have yet to
signal that a break down is in store. SPX Weekly

I also have a link to the cumulative NYSE adv / dec line. The market tends to stay on a
positive course so long as the weekly a/d line can stay above its 6 week simple moving
average. NYSE Advance / Decline